Credit Card Processing Companies
Finding the right credit card processing company (bank, financial organization, etc.) is challenging project to undertake, and there are risks associated with choosing a company that doesn’t properly meet your business needs. If your business plans on virtually processing credit cards (via the internet) or in the traditional, physical manner, there are several processing companies and gateways (a gateway is a service that processes online payments in a secure way) to choose from. You’ll need to insure your shopping cart software properly interfaces with these gateways.
Credit card payment is the simplest and most common way to purchase goods online, but understanding how credit card processing works can be baffling to a business owner. And given the importance to your company, you’ll want to get educated before moving forward with a credit card processing firm.
When a virtual / retail merchant charges your credit card thru a credit card terminal, the credit card and payment details are sent electronically to the merchant’s bank, which contacts the credit card issuing bank. When the transaction is accepted, funds are deposited in the merchant’s account. The only difference when using the internet for virtual credit card processing is the credit card terminal in a retail store is replaced by payment gateway.
At certain processing phases, a fee will be charged based on the transaction total. The fee amount depends on the payment gateway used by the business, the merchant account, credit card type, and potentially other factors. Factors include:
1) Business / industry type
2) Credit rating
3) Business age – how long have you been in business
4) Transaction method - phone or Internet
5) Average transaction amount, as well as total amount
When comparing credit card processing companies, it is imperative you understand the fee schedule, as well as any equipment you’ll need to buy or lease. In addition to those fees listed above relating to the actual transaction process, make sure you inquire about application fees, the discount rate, overall transaction fees, monthly minimums if there are any (if you don’t reach the minimum, you may be forced to pay a fixed amount), voice and address verification charges, statement fees, and potentially more.
If you are going to buy or lease equipment and/or software for processing virtual transactions make sure you consider these costs too. We suggest you avoid leasing equipment or software, and buy what is necessary. It is a better option in the long run.
As you can see, there are numerous fees that can really impact your margins – so pay close attention and read the contract and terms in carefully. And be aware of claims of ‘Free Credit Card Processing’ – these companies tend to charge excessive and at time unwarranted fees. Remember, there is no such thing as a free lunch!
Batch Credit Card Processing
Batch credit card processing allows merchants to securely upload a single file containing hundreds or thousands of credit card transactions and processes them at once. Batch processing drastically reduces the time and resources necessary when processing transactions one at a time, resulting in increased profitability. Sophisticated software and batch credit card processing companies allow businesses to transmit quickly and easily, and in some cases, even provide automated payment systems via the internet. When choosing software, make sure you research the reporting tools that are included – as you’ll occasionally need to quickly and efficiently examine your data for a variety of reasons.
